The Canadian dollar is mostly flat today. Last Friday, the currency sold off sharply against the US dollar following strong US non-farm payrolls figures that beat expectations. As jobs and US wages accelerate, the likelihood of more US rate hikes is increasing. As a result, the US dollar strengthened against the Canadian dollar. Despite last Friday's sell-off, the Canadian dollar is more likely to keep strengthening thanks to strong crude oil prices, reasonably good economic data, and expectations that the Bank of Canada will raise rates again this year. As we wrote in a commentary last week, the Canadian dollar would be even stronger without NAFTA-related risks. Looking at the latest news, Reuters is reporting that Prime Minister Justin Trudeau has said Canada will walk away from a bad deal. Following the Montreal round of negotiations, tensions between the US and Canada are worsening the outlook for a positive conclusion from the negotiations. Our short-term and medium-term outlook on the currency remain bullish.
The USD/CAD exchange rate is currently above 1.2420. The euro is flat against the Canadian dollar, with EUR/CAD currently above 1.5460. The pound is flat against the Canadian dollar, with GBP/CAD trading above 1.7520.
Looking at economic data from Canada, markets will be focused on jobs numbers at the end of the week. Tomorrow, we'll get trade balances and Ivey PMIs. On Wednesday, we'll see building permits. On Thursday, we'll get new housing prices and housing starts. Friday is the most important day, and we'll see changes in employment as well as the unemployment rate. Last week, November GDP growth met consensus expectations.
As the Canadian dollar strengthens, we are upgrading the currency to bullish in the medium-term. Looking at a weekly chart, the currency is trading within normal conditions. This is based on various technical indicators on the Canadian dollar currency index.